Pacific solution to welfare reform

WELCOME to the new and permanent politics of labour shortages in Australia that are forcing reforms to welfare, immigration, indigenous and foreign policy in this country.

The latest evidence is Australia's embrace of a pilot seasonal worker scheme under which up to 2500 visas will be issued for employees from four Pacific nations to work in the horticulture industry seven months in any 12-month period. It is a singular policy departure that was a bridge too far for John Howard.

It is a vital change given Australia's commitment to an expanded permanent migration intake and, like the temporary 457 visas, shows a support for flexibility in meeting labour shortages. These flexible arrangements will become a critical supplement to Australia's permanent migration program.

The drive for this reform came from Kevin Rudd. Rudd sees this as a win-win outcome. It is a win for the rural sector and a win for Australia's new strategic approach to the Pacific. During his time as shadow foreign minister, Rudd became a convert to this idea. It has a high political sensitivity and its patronage by a Labor Government is useful because Labor is best able to manage trade union and community concerns.

The Rudd cabinet has acted in response to serious labour shortages in horticulture and the inability to fill these vacancies from the domestic market. Its pilot program is a small step of great political import.

This decision follows a three-year campaign by the National Farmers Federation and a five-year campaign by the South Pacific nations.

Pivotal to Rudd's decision is the success of this experiment in New Zealand, which Australia has carefully assessed.

The announcement was made by Agriculture Minister Tony Burke and NFF vice-president Charles Burke at the Marrickville Fruit and Vegetable Market in Sydney on Sunday. It follows NFF estimates of "a chronic nationwide shortfall of 22,000 seasonal workers in horticulture", with the industry saying that up to $700million of fresh produce had been left to rot because of labour shortages. The NFF declares the pilot is a litmus test for a national scheme to assist the industry.

But for the Rudd Government and the NFF this is one step in a bigger structural test: meeting the wider shortages in the agriculture sector as a whole.

In April this year, the NFF released its Labour Shortage Action Plan warning that when farms emerge from the drought 100,000 new employees will be needed to return to pre-drought production levels.

The Rudd cabinet is moving with great caution. The 2500 visas apply over three years with a review after 18 months. But Labor is persuaded of this reform, along with former foreign minister Alexander Downer, who was unable to persuade Howard. There is one basic principle guiding the Government: the need to maintain community confidence.

The conditions defined by the Rudd cabinet are tight. Overseas seasonal workers can be employed only when it is apparent that Australians are not available. All seasonal workers must be employed according to award standards with the same protection from exploitation as Australian workers.

As Burke says, the scheme is "not a cheap labour option". Employers will meet half the return airfares and have pastoral responsibilities.

Finally, as a condition for participating, employers must commit to wider training programs for Australians, notably welfare recipients, indigenous people and humanitarian and refugee job seekers. Many people have overlooked this final condition. It ties employment of Pacific Islanders to efforts to get Australians into these jobs as well. This nexus, established by cabinet, must be pursued.

The new scheme will be run by Julia Gillard's Department of Education, Employment and Workplace Relations. The monitoring will be thorough. Labor knows the unions will be on the task.

Australia needs to manage this initiative short of any Hansonite breakout. Cabinet's informal thinking when the numbers are expanded after the pilot plan is to keep supply short of demand to deny opportunity for wage exploitation.

The impact of Pacific workers will expose a historic failure in Australian policy and values. Why, pray, is Australia importing seasonal unskilled workers?

Their arrival will highlight our long-term unemployment, under-use of labour and low levels of private employment among working-age Aboriginal Australians where the horticultural industry could be a vehicle for the welfare-to-work transition, an argument advanced by Cape York leader Noel Pearson.

Indigenous leader Warren Mundine has said it is bizarre the Rudd Government is bringing in Pacific workers when there are thousands of indigenous people unemployed. The reason is obvious: because the jobs are unfilled. "What training do you need to pick fruit?" Mundine asked. It is a good question.

The introduction of thousands of seasonal workers after the pilot period must have a catalytic impact. Indeed, the scheme is designed to have this effect. Its success will be tested, in part, by the reform of income support rigidities that impede greater labour-force participation among indigenous people and welfare recipients. This is tied to Andrew Forrest's plan to create 50,000 jobs for Aborigines in two years.

The politics are obvious: there is more chance of getting these welfare reforms with the seasonal workers than without them.

The pilot scheme is limited to Kiribati, Tonga, Vanuatu and Papua New Guinea. Foreign Minister Stephen Smith signals the door is open to other Pacific nations down the track. The Government conceives this as a Pacific scheme only, not Asian, yet deciding who's in and who's out could be difficult.

The same argument applies to its scope in Australia.

If the horticulture industry is able to employ seasonal workers, then what about other industries that argue they have similar needs? After all, Australia's labour shortages are only going to intensify in agriculture and the regions as well as the cities.

The only solution is whole-of-government. This involves more flexible migration and temporary migration policies, a review of income support to encourage labour market participation, and more intense training and retraining for Australians. As Rudd's cabinet seems to recognise, such initiatives are self-reinforcing.

South Pacific nations want this scheme to boost their remittances.

But Helen Hughes, from the Centre for Independent Studies, has raised the critical foreign policy question: remittances cannot solve the region's problems unless its governments commit to legal and economic reforms that generate jobs and investment.